Social Security: Indexing to the Rescue

Long-term stock-indexing would have increased Social Security assets compared with the investment in Treasuries over any reasonable investment horizon.

Could there be a relatively simple way to mitigate the future funding problems of Social Security, one that holds the potential to fully resolve those problems in the long term? There is, using an old idea that has fallen into obscurity as a casualty of lackluster market performance during the past 13 years: The U.S. should invest a portion of the Social Security Trust Fund in a stock-market index fund, rather than putting it all into U.S. Treasuries.

Social Security is basically a system of forced savings for retirement,...